China's oil majors are planning ahead in Hainan province as they
believe the package of preferential policies to build the area into a
globally influential and high-quality free trade port will drive up
local oil and gas demand.
Hainan Oil Refinery & Chemical Co Ltd, the Hainan refinery unit
of the country's largest oil refiner China Petrochemical Corp (Sinopec),
plans to produce up to 1,000 KTA (kilotons annually) of ethylene in a
refining renovation and extension project. The province is seen serving
as a new growth engine for ethylene in both the nation and the global
The upgrade is expected to boost economic growth in the downstream
sector by more than 100 billion yuan ($14.1 billion), the company said.
According to the government's plan of establishing a more liberalized
and open shipping system, it is expected the volume of freight traffic
in Yangpu port will dramatically increase. The ethylene and petroleum
refining project will help expand the import and export trade volume
while boosting the local port industry, it said.
China National Petroleum Corp (CNPC), one of China's top three oil
giants, has also been actively exploring new energy projects in the
province. They include distributed energy, solar power, geothermal and
CNPC has been trying to lay out a new energy map in the province
through new construction, asset acquisition and joint venture
cooperation in recent years. The firm wants to come up with more energy
alternatives for the free trade port, it said.
Sinopec's Hainan refinery is located in the Yangpu Economic
Development Zone in the northwest of the province, operating 30 sets of
oil refining and petrochemical production units as well as the
corresponding oil storage, transportation facilities and utility
Analysts believe expansion of the refining sector will help bolster
energy reserves while providing bulk cargo transportation support for
the petrochemical and other leading industries.
Rich in natural resources, a unique geographical location, Hainan sees enormous advantages in its trading and storage bases.
It is one of the top reasons why oil and gas majors like Sinopec have
been laying out its strategic blueprint in the province for more than
10 years, said Li Li, the research director at energy consultancy ICIS
With an eye of those advantages, Netherlands-based Royal Vopak, the
world's top independent tank storage provider, has cooperated with the
State Investment and Development Corp starting some 10 years ago to set
up a commercial oil storage base there, she said.
With relatively limited local consumption capacity, the province
should attract more foreign investors to help vitalize the economy, she
Pan Gongsheng, vice-governor of the People's Bank of China, said
earlier the government will encourage commercial banks and other
financial institutions to encourage an open economy and support a global
exchange for energy, shipping and bulk commodities.
The government said development of the province will first focus on
liberalization and facilitation of trade and investment, followed by
further optimizing the opening-up policies for the economy and
By 2035, high-level process supervision will be mostly built to
achieve free trade and investment, free cross-border capital flows, free
and convenient transportation and access for people, and the safe and
orderly flow of data.
The province will further enable the free flow of trade and
investment by introducing measures that center on zero tariffs for the
trade of goods to encourage the free flow of trade and give foreign
investors greater access to the financial services field, it said.
Finance Vice-Minister Zou Jiayi said some imported goods are exempted
from import duty, value-added tax and consumption tax before the
island-wide Customs clearance operation in 2025. Goods outside the
imported taxable commodities will be exempt from import duties after
Hainan Free Trade Port will also come up with a zero-tariff negative
list and three positive lists that focus on supporting high-tech,
ecological and environmental protection and specialty industries. More
efforts will also be made to gradually shorten the negative list and
expand the positive list in the future.